3 Big Barriers to Homeownership
For the second quarter, according to BuzzBuzzNews First American surveyed title insurance agents and real estate professionals. Respondents said there were 3 big barriers to homeownership: the lack of inventory, affordability, and the downpayment.
The national inventory crisis is making the market especially challenging for first-time buyers to find affordable starter homes they like. Millennials reportedly make up just under 87 percent of all first-time buyers.
The Federal Reserve Bank of Kansas City claims the housing market is facing “its greatest supply shortage in 60 years of record keeping.”
The ongoing inventory crisis will make it hard for buyers to become homeowners — even once they are financially ready to make the leap. More than one-third of respondents cited inventory as the biggest obstacle facing first-time homebuyers. Millennial homebuyers in the US are reportedly less deterred by rising interest rates than they are by the lack of affordable inventory.
Respondents also predicted national mortgage rates would need to rise to 5.6 percent, which is 1 percentage point above its current level, before becoming a deterrent to first-time buyers.
3 Big Barriers to Homeownership
- FHA If you have a credit score of 580 or higher, you could be eligible for a mortgage with a down payment as low as 3.5 percent of the purchase price. If your credit score is lower than 580, you still might qualify for an FHA mortgage, but the down payment would be at least 10 percent of the purchase amount.
- USDA The homebuyer assistance program focuses on homes in certain rural areas. You don’t need to buy or run a farm to be eligible. The USDA guarantees the home loan. A downpayment is not required, and the loan payments are fixed. Applicants with a credit score of 640 or higher typically get streamlined processing.
- VA loan. VA loans come with competitive interest rates and require no down payment. You aren’t required to pay for private mortgage insurance (PMI). There is not a minimum credit score needed for eligibility.
- Good Neighbor Next Door. Sponsored by HUD, this program provides housing aid for law enforcement officers, firefighters, emergency medical technicians and pre-kindergarten through 12th-grade teachers.
More of the grants and programs to help you buy your first home
- Fannie Mae or Freddie Mac. With the backing of Fannie Mae and Freddie Mac, lenders can offer competitive interest rates and accept down payments as low as 3 percent of the purchase price.
- Energy-efficient mortgage (EEM). A “green,” mortgage will help you add improvements to your home to make it more environmentally friendly. The federal government supports EEM loans by insuring them through the FHA or VA programs.
- FHASection 203(k). This type of loan, backed by the FHA, takes into consideration the value of the residence after improvements. It then lets you borrow the funds you’ll need to carry out the project and includes them in your main mortgage. …
- Native American Direct Loan. You may qualify as a Native American veteran along with your spouse. and if you want to buy a home on federal trust lands. you need to make a down payment or pay for private mortgage insurance (PMI).
That should take care of one of the 3 Big Barriers to Homeownership. With inventory tight, you want to prepare to act fast if you find your dream house.
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We buy and sell properties throughout the greater Kansas City area. We specialize in buying distressed homes, then renovating and reselling them to home buyers and landlords. Terra Firma Property Solutions: excited to be part of the economic rejuvenation of Kansas City and its surrounding areas.
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